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While financial institutions across the country flounder, Los Alamos National Bank thrives because it did not engage in sub-prime lending, has limited non-traditional loans and no structured debt instruments.
LANB President Steve Wells discussed the bank and the overall financial market during his talk to the Los Alamos Public Safety Association Thursday.
“Neither Trinity Capital Corporation, the holding company for LANB and Title Guaranty & Insurance Company, has any mortgage-backed securities or other material investments in troubled or failed investment banks, or Fannie Mae or Freddie Mac,” Wells said. “We didn't think it made sense to go into debt so we passed on it. The financial services companies that have taken significant losses or have failed were heavily involved in these types of loans and investments.”
The bad thing about the current situation, he said, is that it's not a national issue, but a global issue; this is the first regurgitation of the explosion of global trading. Europe is in real trouble because they have just one currency, he said.
Wells resents the government's $700 billion bailout for banks because he doesn't believe it's really a bailout for banks.
“The term 'bank' is being used very loosely, most of the community banks didn't take exotic investment risks and are solid,” Wells said. “We took the long road and didn't take the short one. I think this bailout isn't for banks - it's a bailout for Wall Street.”
Even though the difficulties experienced at other institutions do not affect the financial condition of LANB or Trinity, Wells explained that there is concern about how general economic conditions in New Mexico and across the nation could potentially affect customers and operations, and has taken measures to properly manage the risk.
“As part of this risk management, and after a careful assessment of our loan portfolio, we have increased our provision for loan losses,” he said.
Wells told the 30 LAPSA members gathered at Central Avenue Grill that he is optimistic about the market. “I do not believe this is a financial crisis - I think it's a financial panic,” he said. “This is not a financial collapse that Wall Street would like you to believe - Wall Street is not the entire economy.”
With 24/7 news, the media makes it seem like a crisis, he said, adding that he doesn't think anyone really knows what happened. Various experts understand specific aspects but no one understands the entire situation, Wells said.
“How can Ford be trading at 1950s stock levels,” he said. “Things going on are not even rational.”
Speaking to the top public safety officials in the area, Wells advised them to do what they do best. “When everyone else is panicking - the best thing to do is calm down and get your wits about you,” he said.
New Mexico has a natural bouncy because so much of its GDP is made up of government spending, Wells said, adding that LANB is happy to be in New Mexico. He explained that his 401K is down under the current financial climate, but that he has no intention of taking his money out.
Stocks trading at record lows, while detrimental to some, can be positive for others. “I personally believe this is going to be a tremendous opportunity,” Wells said. “Stocks probably won't be as low again for a long time. If you're an investor - you'll see the one time opportunity....”
Wells described LANB's position in the community and its financial position as strong. “Our plan has never been to make money in the short term,” he said. “The long, steady approach has been our plan.”
LANB is currently in its 46th year of operation. It offers financial services at its main office in Los Alamos, an office in White Rock, two offices in Santa Fe and a loan production office in Albuquerque.
LANB also operates a network of 28 automatic teller machines throughout northern New Mexico.